Free quality public services are vital to fight poverty and inequality by putting virtual money in people’s pockets.http://bit.ly/1Ipuoeb

India’s health system is one of those rarities in international health where enthusiastic policy discourse on Universal Health Coverage (UHC) and user charges co-exist. On the one hand, India has plans around health tourism focusing on super-specialty hospitals in the cities; on the other, every year, health payments push 60 million Indians (6 crore) below poverty line.

India’s overall public spending hovers at about 1% of GDP while corresponding figures are much higher for Brazil (4.5%) and United Kingdom (8%). In this regard, spending cuts on public services by the central budget of 2015-16 are deeply concerning. A recent paper brought out by Oxfam India explored available evidence around financing healthcare for all in India and offered recommendations.

Owing to devastating effects of catastrophic out of pocket (OOP) spending, it became politically untenable to continue pushing policy options like user charges, and UHC was seen as a solution. In a way, for many international institutions like the World Bank and experts like David de Ferranti, the promotion of UHC often meant a reversal of some of their previously held policy positions.

In an interview just before its biannual meeting in 2014, the World Bank head Jim Yong Kim admitted: “There’s now just overwhelming evidence that those user fees actually worsened health outcomes. There’s no question about it. So did the bank get it wrong before? Yeah. I think the bank was ideological”.

This echoed the words of the WHO head, Margaret Chan from five years ago: “User fees for healthcare were put forward as a way to recover costs and discourage the excessive use of health services and the over-consumption of care. This did not happen. Instead, user fees punished the poor”.

The recent Lancet Commission on Investing in Health focused on public financing mechanisms and redistributive risk pools in reaching UHC. Yates and Dhillon (2014) observe that the commission also explicitly rejected the 1993 World Development Report’s (WDR) emphasis on private financing including user fees. This marks a new consensus.

Unfortunately, this new consensus has not yet had much policy impact in India. Indian public healthcare delivery system still has user charges, and exemptions and waivers are known to be extremely ineffective. Indian public health system is also being pushed towards an insurance-based model, which will be more private sector friendly, based on the experience with Rashtriya Swasthya Bima Yojana (RSBY), an insurance scheme targeting the below poverty line households.

Despite the inconclusive and generally negative evidence, the high praise given to RSBY and other health insurance schemes by influential agencies including the World Bank Group and the International Labour Organisation (ILO) has contributed significantly to its policy popularity. An Oxfam paper published in 2013 termed such praise as “both premature and dangerously misleading”.

Influence of World Bank Group on the Indian Health System: Equity and Lending

An interesting aspect of private sector expansion in India – along with government largesse and subsidies- is the nature of funds that many private hospital chains attract. The World Bank Group’s commitment to universal and equitable health coverage and to shared prosperity, while welcome, is often at odds with its investment priorities. In India, the International Finance Corporation (IFC) has aided corporate expansion into the hospital sector through loans and advice to the private sector.

Research by Oxfam in 2014 has shown that all the members of the World Bank Group are not aligned in its objectives of UHC and equity in health. To cite from Africa’s experience, the research finds a failure to analyse how to reach poor people effectively via the private sector, failure to direct investments for the benefit of poor people, and failure to even measure whether poor people are being reached.

Indian private healthcare sector represents more than 30 % of IFC’s global healthcare investment portfolio. However, the role and impact of loan recipients on the health system- as in the case of Africa- remains questionable and needs further research to understand this better. Oxfam India’s Working Paper reveals that many recipients of IFC loans in India are major flouters of existing legal requirements mandating access to poor patients.

Skimming through the limited investment information available on the IFC website, we find that four hospitals in New Delhi alone failed to meet their legal obligations to deliver a certain percentage of their services to the underserved, received around $320 million (around Rs 2000 crore at current exchange rates) over the last decade. This is about 10% of the total plan outlay for health in India’s 2015-16 budget.

Evidence-based Policymaking?

Thus, it is in the context of an aggressively expanding private healthcare sector that promotion of insurance schemes to channelize tax money to the private sector must be looked at. It is clear from available evidence that there is no objective basis to claims that insurance based models should be the vehicle for India’s efforts towards UHC.

In this regard, it is observed that there is resistance to objectively evaluate government-funded insurance schemes. Fan and Mahal (2011) note that politicians and administrators often presume that independent evaluations are more damaging than beneficial. Moreover, state governments in India are also known to be hesitant to conducting independent evaluations of health insurance schemes, and RSBY, where it is often claimed that some “rigorous assessment” of its impact is done, admittedly shares its scheme data “only with a carefully selected group of researchers”.

This damning observation was made four years ago in an editorial of a leading medical journal of India, but the situation has not changed much. Added to this, disaggregated data on reimbursements to public hospitals and private hospitals remain unavailable in the public domain.

Interestingly, after RSBY came into the spotlight as a successful international UHC case study and seen as a potential model to expedite India’s efforts towards healthcare for all, the RSBY data portal discontinued uploading even the basic state level data that used to be infrequently updated earlier.

To compound this, the allegation that RSBY is a private sector subsidy scheme remains, particularly in the light of high prevalence of corruption and the limited, or even negative, impact that the scheme seems to have on checking OOP spending. If RSBY becomes the foundation of India’s efforts towards UHC, it will have long-term negative implications to the health system.

Instead of relying on an insurance-based financing model, it is proven that effective tax-financing of public services is a cornerstone of a well-functioning democracy.

Health experts in India have come out in open support of public infrastructure improvement and against insurance-based solutions. They warn about the dangers of India moving towards a system of lightly-regulated health insurance coverage, as the task of regulating the system can be “beyond daunting”, and it is far easier for the government to improve the functioning of health services that are directly under its control.

Needless to add, how the mobilised tax resources are spent despite the budgetary constraints and implementation bottlenecks is as important as expanding the base in the context of progressive taxation. Free quality public services are vital to fight poverty and inequality by putting virtual money in people’s pockets, and, as Oxfam research from 2014 has shown, do the opposite of what user charges do.

In the light of the Third International Financing for Development Conference rejecting the call for a global tax body, it is time to step up civil society advocacy to make tax systems more equitable and efficient in order to support stronger public services, including healthcare for all.

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